|
Listen now
Getting your Trinity Audio player ready...
|
Gasoline prices are expected to increase as the biggest refinery in Africa, the Dangote Plant in Nigeria, has slashed crude oil purchases in recent weeks amid production challenges.
According to Oilprice.Com, which cited Bloomberg, the refinery is set to buy fewer than 300,000 barrels per day (bpd) of crude oil in October. That’s half compared to the over 600,000 bpd purchases in July.
The gasoline unit at the plant has been a substantial supplier of fuel in Nigeria and abroad since it began operations last year.
However, issues at the refinery, including operational setbacks, unplanned outages, a strike, and suspected sabotages by workers amid restructuring, have crippled gasoline output in recent months.
The three-day national strike at the end of September prompted by layoffs at the Dangote refinery has led to production losses of 600,000 barrels, the chief executive of the Nigerian National Petsaid earlier this month.
In the middle of this year, the Dangote refinery was buying large volumes of the U.S. crude WTI, and American crude volumes exceeded local Nigerian crude in supplies for the plant in July.
The 650,000-barrels-per-day Dangote refinery, which began operations last year, has just started exporting fuel to regions other than West Africa.
Since July, the refinery has continued to import the U.S. crude, but at lower levels, and has cut purchases of Nigerian crude, too.
Dangote is estimated to have 287,000 bpd of crude supplied in October, of which 153,000 bpd of Nigerian crude and the remaining consisting of U.S. crude, per Bloomberg’s estimates.
The low levels of gasoline output are set to continue into next year, analysts told Bloomberg.
Subdued crude buying these days also signal issues at the gasoline producing unit. Reduced supply from Dangote has strengthened the European gasoline market in recent weeks.
“European gasoline has been extremely strong as a result of Dangote’s issues,” Sparta Commodities analyst Neil Crosby told Bloomberg.
Follow the MoneyCentral Nigeria channel on WhatsApp: Click here!
